S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  7022

                            I N  S E N A T E

                             March 16, 2016
                               ___________

Introduced  by  Sen.  HANNON -- read twice and ordered printed, and when
  printed to be committed to the Committee on Health

AN ACT to amend the public health law and the general business  law,  in
  relation to price gouging on prescription drugs

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. The public health law is amended by adding  a  new  section
278-a to read as follows:
  S  278-A. LIMITATION ON EXCESSIVE PRICE INCREASES; PRESCRIPTION DRUGS:
1. IN THE EVENT A MANUFACTURER, AS DEFINED IN SUBDIVISION TWENTY-ONE  OF
SECTION  SIXTY-EIGHT  HUNDRED  TWO  OF  THE EDUCATION LAW, OF A BRAND OR
GENERIC DRUG, MADE AVAILABLE IN NEW YORK, INCREASES THE WHOLESALE ACQUI-
SITION COST (WAC) OF A DRUG BY A PERCENT EQUAL TO OR  GREATER  THAN  ONE
HUNDRED  PERCENT AT ANY ONE TIME OR IN THE AGGREGATE IN ANY TWELVE MONTH
PERIOD:
  (A) THE MANUFACTURER SHALL, NOT LESS THAN THIRTY DAYS PRIOR TO  INSTI-
TUTING  SUCH  INCREASE, NOTIFY THE COMMISSIONER AND THE DRUG UTILIZATION
REVIEW BOARD ESTABLISHED UNDER SECTION THREE  HUNDRED  SIXTY-NINE-BB  OF
THE  SOCIAL  SERVICES  LAW.  NOTICE SHALL BE PROVIDED ON THE FORM ESTAB-
LISHED PURSUANT TO SUBDIVISION TWO OF THIS SECTION; AND
  (B) THE COMMISSIONER SHALL REQUIRE PRIOR AUTHORIZATION  AND  AUTHORIZE
MEDICAID  MANAGED CARE PLANS TO REQUIRE PRIOR AUTHORIZATION FOR THE DRUG
EFFECTIVE AS OF THE DATE OF THE PRICE INCREASE AND  CONTINUING  UNTIL  A
DETERMINATION IS MADE BY THE DRUG UTILIZATION REVIEW BOARD.
  2.  THE COMMISSIONER, IN CONSULTATION WITH THE DRUG UTILIZATION REVIEW
BOARD, SHALL  PRODUCE  AND  MAKE  AVAILABLE  TO  MANUFACTURERS  A  PRICE
INCREASE NOTIFICATION FORM THAT SHALL ELICIT:
  (A) THE MOST RECENT WHOLESALE ACQUISITION COST (WAC) OF THE DRUG PRIOR
TO  AN  INCREASE EQUAL TO OR GREATER THAN ONE HUNDRED PERCENT AT ANY ONE
TIME OR IN THE AGGREGATE IN ANY TWELVE MONTH PERIOD  IN  EITHER  PRICING
MEASURE.  FOR  THE  PURPOSES  OF THIS SECTION WHOLESALE ACQUISITION COST
(WAC) SHALL INCLUDE THE PRICES FOR EACH DOSAGE, SIZE OR CONCENTRATION OF
THE DRUG OFFERED OR SOLD BY THE MANUFACTURER;

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD14707-01-6
              

S. 7022                             2

  (B) THE WHOLESALE ACQUISITION COST (WAC) OF THE  DRUG  WHEN  EXCEEDING
THE ONE HUNDRED PERCENT THRESHOLD;
  (C)  ANY  MATERIAL  CHANGE IN INGREDIENT, PRODUCTION, OR MANUFACTURING
COSTS RESULTING IN THE PRICE INCREASE;
  (D) IN THE CASE OF A BRAND DRUG, THE EXPIRATION DATE OF THE PATENT;
  (E) IN THE CASE OF A GENERIC DRUG, WHETHER THE DRUG IS A  SOLE  SOURCE
DRUG; AND
  (F)  ANY  OTHER  INFORMATION  THE  MANUFACTURER  DEEMS RELEVANT TO THE
BOARD'S REVIEW.
  3. UPON RECEIPT OF A PRICE INCREASE NOTIFICATION FORM, THE DRUG UTILI-
ZATION REVIEW BOARD SHALL REVIEW THE PRICE INCREASE AND MAKE A  DETERMI-
NATION AS TO WHETHER THE PRICE INCREASE IS EXCESSIVE. IN MAKING A DETER-
MINATION THE BOARD SHALL CONSIDER:
  (A)  THE WHOLESALE ACQUISITION COST (WAC) OF THE DRUG IN COMPARISON TO
ANY GENERIC EQUIVALENT OR THERAPEUTICALLY EQUIVALENT DRUG;
  (B) THE FDA APPROVED OR COMPENDIUM SUPPORTED USE OF THE DRUG AND CRIT-
ICAL NEED TO THE PATIENT;
  (C) ANY KNOWN MARKET FACTORS JUSTIFYING THE PRICE INCREASE,  INCLUDING
BUT NOT LIMITED TO:
  (I) WHETHER THE DRUG HAS BEEN ABSENT FROM THE MARKET FOR ANY PERIOD OF
TIME; AND
  (II) CHANGES IN MANUFACTURING OR REGULATORY REQUIREMENTS OR COSTS.
  (D)  ANY  MATERIAL CHANGE IN THE PREVALENCE OR SEVERITY OF THE DISEASE
OR MEDICAL CONDITION OR CONDITIONS THAT THE DRUG IS APPROVED TO TREAT;
  (E) IN THE CASE OF A BRAND DRUG, THE EXPIRATION DATE  OF  THE  PATENT;
AND
  (F)  IN  THE CASE OF A GENERIC DRUG, WHETHER THE DRUG IS A SOLE SOURCE
DRUG.
  4. UPON A FINDING BY THE DRUG UTILIZATION REVIEW BOARD THAT A MANUFAC-
TURER HAS INSTITUTED AN EXCESSIVE PRICE INCREASE, (I)  THE  BOARD  SHALL
REQUIRE  PRIOR AUTHORIZATION FOR THE DRUG AND AUTHORIZE MEDICAID MANAGED
CARE PLANS TO REQUIRE PRIOR AUTHORIZATION  UNTIL  THE  BOARD  DETERMINES
OTHERWISE;  AND  (II)  THE  BOARD  MAY  REFER THE MATTER TO THE ATTORNEY
GENERAL WITH ANY INFORMATION NECESSARY FOR THE INVESTIGATION AND  PROSE-
CUTION   OF   PRICE  GOUGING  VIOLATIONS  UNDER  SECTION  THREE  HUNDRED
NINETY-SIX-RRR OF THE GENERAL BUSINESS LAW. IN THE EVENT THE BOARD  DOES
NOT  FIND  THAT  THE  MANUFACTURER  HAS  ENGAGED  IN  AN EXCESSIVE PRICE
INCREASE, THE BOARD SHALL REMOVE THE REQUIREMENT FOR PRIOR AUTHORIZATION
AND SUCH AUTHORITY GRANTED TO MEDICAID MANAGED CARE PLANS  TO  INSTITUTE
PRIOR AUTHORIZATION UNDER THIS SECTION SHALL CEASE.
  S  2. The general business law is amended by adding a new section 396-
rrr to read as follows:
  S 396-RRR. PRICE GOUGING; PRESCRIPTION DRUGS. 1. LEGISLATIVE  FINDINGS
AND  DECLARATION.  THE  LEGISLATURE  HEREBY  FINDS  THAT EXCESSIVE PRICE
INCREASES TO PRESCRIPTION DRUGS THAT LACK JUSTIFICATION BASED ON  MARKET
FORCES  CREATE  A  PUBLIC  HEALTH  RISK  TO CONSUMERS THAT RELY ON THESE
PRESCRIPTION DRUGS. IN ORDER TO PREVENT A MANUFACTURER,  AS  DEFINED  IN
SUBDIVISION  TWENTY-ONE OF SECTION SIXTY-EIGHT HUNDRED TWO OF THE EDUCA-
TION LAW, FROM TAKING UNFAIR ADVANTAGE OF CONSUMERS WHO  RELY  UPON  AND
MAY LOSE ACCESS TO THE PRESCRIPTION DRUGS IF THE MEDICATION HAS A SUDDEN
AND  EXCESSIVE  PRICE INCREASE, THE LEGISLATURE DECLARES THAT THE PUBLIC
INTEREST REQUIRES THAT SUCH CONDUCT BE PROHIBITED AND  MADE  SUBJECT  TO
CIVIL PENALTIES.
  2.  IN ORDER TO PREVENT A DRUG MANUFACTURER, AS DEFINED IN SUBDIVISION
TWENTY-ONE OF SECTION SIXTY-EIGHT HUNDRED TWO OF THE EDUCATION LAW, FROM
IMPOSING UNCONSCIONABLY AND UNJUSTIFIABLY EXCESSIVE PRICE INCREASES, THE

S. 7022                             3

ATTORNEY GENERAL MAY, UPON REFERRAL FROM  THE  DRUG  UTILIZATION  REVIEW
BOARD  AS  CODIFIED IN SECTION TWO HUNDRED SEVENTY-EIGHT-A OF THE PUBLIC
HEALTH LAW, APPLY IN THE NAME OF THE PEOPLE OF THE STATE OF NEW YORK  TO
THE  SUPREME COURT OF THE STATE OF NEW YORK WITHIN THE JUDICIAL DISTRICT
IN WHICH SUCH VIOLATIONS ARE ALLEGED TO HAVE OCCURRED, ON NOTICE OF FIVE
DAYS, FOR AN ORDER ENJOINING OR RESTRAINING COMMISSION OR CONTINUANCE OF
THE ALLEGED UNLAWFUL ACTS. IN ANY SUCH PROCEEDING, THE COURT MAY  IMPOSE
A  CIVIL PENALTY IN AN AMOUNT NOT TO EXCEED TWENTY-FIVE THOUSAND DOLLARS
AND, WHERE APPROPRIATE, ORDER RESTITUTION TO AGGRIEVED CONSUMERS.
  3. WHETHER A PRICE IS UNCONSCIONABLY AND UNJUSTIFIABLY EXCESSIVE IS  A
QUESTION  OF  LAW  FOR  THE  COURT.  THE  COURT'S  DETERMINATION  THAT A
VIOLATION OF THIS SECTION HAS OCCURRED SHALL BE BASED UPON THE FOLLOWING
FACTORS:
  (A) THE INCREASE IN PRICE IS UNCONSCIONABLY EXTREME;
  (B) THE DRUG IS VITAL AND MEDICALLY NECESSARY TO  THE  HEALTH  OF  THE
CONSUMER;
  (C)  THE  DRUG IS A SOLE SOURCE DRUG WITHOUT A THERAPEUTIC EQUIVALENT;
AND
  (D) THE PRICE INCREASE WAS WITHIN THE CONTROL OF THE MANUFACTURER  AND
NOT  CAUSED  BY  COSTS  IMPOSED  ON OR FACTORS BEYOND THE CONTROL OF THE
MANUFACTURER.
  S 3. This act shall take effect immediately.